Wellcome Trust Annual Report and Financial Statements 2017 Contents

Annual Report and Financial
Statements 2017

2

Wellcome Trust Annual Report and Financial Statements 2017

Contents

Report from the Chair and the Director

5

Trustee’s Report

8

What we do

Review of Charitable Activities Review of Investment Activities Financial Review
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18 29 34 37 40
Structure and Governance Risk Management Remuneration Report

Audit Committee Report

43

45

Independent Auditor’s Report

Financial Statements

58

58 59 60 61 62 63
Consolidated Statement of Financial Activities Consolidated Balance Sheet Statement of Financial Activities of the Trust Balance Sheet of the Trust Consolidated Cash Flow Statement Notes to the Financial Statements

Reference and Administrative Details

117

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“At Wellcome, we believe in the power of ideas to improve health”

Jeremy Farrar Director

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Report from the
Chair and the Director

“Our core approach is funding people to explore great ideas, at every step of the way from discovery to impact”

At Wellcome, we believe in the power of ideas to improve

cause of maternal mortality in the world. It also includes

supporting research in the humanities and social sciences, such as a project which this year published ethical guidelines for involving pregnant women in Zika vaccine research. And resources like the Human Induced Pluripotent Stem Cell Initiative, which has created a catalogue of high-quality stem cell lines for other researchers to use, whether in developmental biology or research into diseases such as cancer. health. Funded from our independent investment portfolio, we support thousands of scientists and researchers in more than 70 countries, as well as innovators, educators and artists. Together, we take on big problems, fuel imaginations and spark debate, working always to achieve better health for everyone.

Wellcome has grown significantly in recent years, in terms of both influence and how much we can spend on our charitable activities. This year, Wellcome spent £1.1 billion, more than ever before and double what we spent a decade ago. Our investment portfolio returned 16.9% in the year to September 2017; this equates to £3.5 billion on the year’s starting value of £20.9 billion. The 9.1% annual return over the past decade is an excellent result given that this period included the worst financial crisis in living memory. The financial strength we derive from our £23.2 billion portfolio underpins the ability to pursue our mission.

Ambitions and opportunities

Having committed to a new scale of ambition in our strategic framework in 2015, we continued to develop the strategies of our three funding divisions – including Science under the leadership of Jim Smith, who became Director of Science in December 2016 – and to make other changes within Wellcome this year. Our aim, supported by our governance and management of risk, is to make the organisation better prepared to operate at this new scale, and achieve the ambitious goals we set ourselves.

Improving health

We start with an example. In 1980, Chris Fairburn arrived in Oxford with an idea. He thought that a form of cognitive behavioural therapy (CBT) might be the best way to treat bulimia nervosa, an eating disorder. His research has continued with support from Wellcome ever since and Chris has proved that his idea was a good one.
The past five years have seen a powerful bull market from which Wellcome has benefitted enormously, but the investment environment will become more difficult at some point. We are concentrating on careful stewardship of the assets and partnerships in which we invest, aiming to ensure that the portfolio is capable of generating cash flow sufficient to support the current level of spending on key activities in real terms, even against a more challenging backdrop.
In May 2017, a version of CBT developed by Chris and his colleagues was formally recommended in the UK for treating adults with any form of eating disorder. Now approaching retirement and the end of his Wellcome Principal Research Fellowship, Chris has led the development of an online training programme for therapists, which means his idea has the potential to help millions of people affected by eating disorders around the world.
We have also been examining how best to balance protecting our core activities with being well placed to take risks and seize new opportunities. From 2017/18 onward, we have adopted a new approach to how we fund our charitable activities. We plan an average funding level for our core activities of around £900 million a year in real terms over a five year period, thus protecting this funding from the volatility of the financial markets, and bringing long-term stability to our spending plans.
This case illustrates our core approach: funding people to explore great ideas, at every step of the way from discovery to impact. Everything we do is grounded in our support for research that generates new knowledge in biomedical science, from how the body works to how infectious diseases spread.
In addition, we plan discretionary funding to support Priority areas and other opportunities to bring about lasting changes that will make a big difference to human health in the shortor long-term. Reflecting this approach, the breakdown of our spend on charitable activities now includes Priority areas as a separate item alongside our funding divisions.
Our approach includes funding large-scale studies like the WOMAN trial, which showed this year that an inexpensive drug called tranexamic acid could prevent a third of maternal deaths caused by excessive bleeding after childbirth – the biggest

5

Report from the
Chair and the Director

“Our aim is to make the organisation better prepared to operate at this new scale, and achieve the ambitious goals we have set ourselves.”

Science thrives when it includes a diversity of people, ideas and approaches, but the statistics show that major inequalities and barriers remain across the research benefits gained from deep EU partnerships are maintained, and that the UK can continue to attract excellent scientists at all career levels. sector. We appreciate that Wellcome has a lot of work to do internally on this issue, so one of our six current Priority areas is Diversity and Inclusion, with a dedicated team driving reform within Wellcome first, as well as seeking to influence the whole sector and society more widely. This work should benefit not just individuals but the entire scientific enterprise.
Research is a fast-moving intellectual endeavour, so Wellcome needs to have a working culture that can adapt to new opportunities. In line with the same financial discipline we expect of our grantholders, budgets for internal support activities were held at levels similar to last year to ensure that as much of our spending as possible goes directly towards achieving our mission. We thank our colleagues at Wellcome for embracing this and other significant changes this year that put us in an even better position to support great ideas that will improve health.
Another Priority area is Vaccines, and the team leading our work in this area played a central role in the launch of the Coalition for Epidemic Preparedness Innovations (CEPI) at the World Economic Forum in January 2017. CEPI brings together governments, civic society, businesses and charitable
We also thank the global research community for their

essential support for all our work, from reviewing grant applications to sitting on committees and providing advice. Without such dedication, the research enterprise simply would not function and the beneﬁts to society would be lost. foundations around the world to develop vaccines against infections with the potential to cause epidemics and pandemics.

Working together

Operating at such a scale will always require strong partnerships. This year, we worked closely with the G7 and G20 nations, and at the United Nations General Assembly, to secure commitments to act on some of the biggest health challenges in the world today, including drug-resistant infections and climate change. These are Priority areas for Wellcome, and our policy and advocacy work is becoming more signiﬁcant as we seek to engage the world’s political leaders in order to achieve our goals.
Richard Hynes served as a Governor of the Wellcome Trust from 2007 until December 2016, and Kay Davies will be stepping down from the Board of Governors in January 2018 after ten years, including four years as deputy chair. Bill Burns was appointed Chair of the Audit Committee in January 2017. We are grateful for all their wisdom, invaluable contributions and support during this transitional phase for Wellcome.

Finally, we want to thank Danny Truell who has been an extraordinary Chief Investment Officer for Wellcome. From 2005 until he stepped down to become Emeritus Partner in September 2017, he led a team which delivered returns that have allowed us to more than double our charitable spend and given us confidence of meeting our ambitions for the future.
As negotiations continue for the UK’s exit from the European Union, we are engaging with representatives on both sides to ensure that British research continues to contribute to, and benefit from, the closest possible ties with Europe. It is vital, both for global science and the British economy, that the

Eliza Manningham-Buller Chair, Wellcome Trust
Jeremy Farrar Director, Wellcome Trust

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What we do

We are an independent global charitable foundation dedicated to improving health.
Together, we can do more. We can drive reform to ensure that ideas can reach their full potential. And we can give focused, intensive support when we see real opportunities to transform lives. As an independent charitable foundation, we are willing to take risks. We combine the ability to act swiftly with long-term ambition.

Driving reform

We promote change in practices and the removal of barriers so that ideas can reach their full potential – leading by example, convening alliances, and campaigning for wider reform in priority areas.

Our vision and objects

The objects of the Wellcome Trust, as set out in our Constitution, are:

Current priority areas: Diversity and inclusion, and Science education.
To protect, preserve and advance all or any aspects of the health and welfare of humankind and to advance and promote knowledge and education by engaging in, encouraging and supporting:

Our strategic framework
Our funding approach

Wellcome benefits people around the world by improving health through three complementary approaches across science, research and engagement with society. This framework allows us to adapt as new ideas and challenges arise, drawing on insights from more than 80 years of achievement and our broad network of experts.
For 2016/17, we used an established formula to identify the amount of funding that we would plan to commit over a five year period, including the value for the first year. Based on this plan our charitable expenditure was £1,134 million this year.
• research into any of the biosciences; and

• the discovery, invention, improvement, development and application of treatments, cures, diagnostics, and other medicinal agents, methods and processes that may in any way relieve illness, disease, disability or disorders of whatever nature in human beings or animal or plant life;
As announced in September 2017, from 2017/18 onward, we have adopted a new approach to how we fund our charitable activities. The new approach will protect our core activities in Advancing Ideas and provide stability and predictability for our spending plans. We plan a funding level of around £900 million a year, on average, over a ﬁve year period, which we intend to increase annually with inﬂation.

Advancing ideas

We support excellent research addressing fundamental health challenges of our time, across discovery science, medical innovation and the humanities and social sciences. Supporting ideas from people dedicated to discovery, creativity and innovation will always be at the heart of Wellcome’s activities.
To advance and promote knowledge and education by engaging in, encouraging and supporting:

• research into the history of any of the biosciences; and
In addition, to support the Priority areas, and potentially other large-scale and high-impact activities, we plan additional discretionary funding. We have currently identified funding of £865 million, of which £365 million has been budgeted to existing priority areas. We will add to this funding only when the investment portfolio performance is sufficiently strong. New priority areas or other activities supported through this funding will be highly ambitious projects aiming to bring about significant change within a specific time period.
• the study and understanding of any of the biosciences or the history of any of the biosciences.
We are open to proposals and give grants through schemes run by our three funding divisions: Science, Innovations, and Culture and Society. We also initiate and maintain direct activities, such as Wellcome Collection.

Our philosophy

Good health makes life better. We want to improve health for everyone by helping great ideas to thrive.

Seizing opportunities

Science and research expand knowledge by testing and investigating ideas. New understanding can then be applied to health, and change medicine, behaviour and society. That is why we support thousands of curious, passionate people all over the world to explore great ideas, at every step of the way from discovery to impact.
When we judge that concerted intervention will accelerate progress towards better health, we provide focused, intensive support to create a step change in a priority area within ﬁve to ten years.
The approach outlined above will help us manage our internal resources for achieving our long-term vision of improving health, as set out in our strategic framework.
Current priority areas: Vaccines, Drugresistant infections, Research in Africa and Asia, and Our Planet, Our Health.

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Review of Charitable Activities

Our aim is to catalyse excellent science and maximise its health impacts. A major part of our work is engaging with the research community, many of whom will apply to and be supported by our funding schemes.

Science

(Includes £51 million of allocated support costs)

£832m

We maximise Wellcome’s impact on human health by understanding the social and cultural contexts of science and health. This includes supporting research in the humanities and social sciences, and public engagement with science.

Culture and Society

£112m

We work with people and organisations across the world to transform great ideas, discoveries and inventions into treatments and products.

Innovations

£116m

Wellcome chooses priority areas where we want to see signiﬁcant change. We lead and are accountable for these activities, working with partners to achieve ambitious goals.

Priority areas

£162m

Annual Charitable Expenditure is analysed in the Financial Review on page 30.

Our Mixed Motive Investments are discussed under the Review of Investment Activities on page 28.

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Review of Charitable Activities (continued)

This year, we celebrated many

In March 2017, we published ﬁve broad

goals for our engagement with policymakers in the UK and around the world:

Applying genomics

achievements made by people we support through our three funding divisions – Science, Innovations, and Culture and Society – and our priority areas. This report highlights just a few examples – more can be found on wellcome.ac.uk. These achievements often reﬂect the results of many years of research from previous funding.

The Wellcome Trust Sanger Institute and the wider Wellcome Genome Campus operate under the auspices of Genome Research Limited (“GRL”), a wholly owned subsidiary of Wellcome. In November 2016, Prime Minister Theresa May opened two new buildings on the site: one housing sequencing facilities for the Sanger Institute and Genomics England; the other a Biodata Innovation Centre for start-up genomics companies.

• Champion and support research through changing times

• Ensure the world is prepared for the next epidemic

• Advance the global response to drug-resistant infections
Scientiﬁc research is inherently
• Harness the creativity of innovators

to deliver health impact cumulative and progressive, opening up new knowledge, understanding and applications. The majority of our funding supports hypothesis-based investigation; by deﬁnition, the outcome of such activity cannot be predicted with certainty, but we are conﬁdent that the people, teams and places we support will produce valuable information and insight in support of our overall mission to improve health. The funding of translation activity is structured through milestones, ensuring only
• Push research and development for health up the global political agenda

Bringing together local and global researchers from different sectors fuels ambitious collaborations. For example, the Human Cell Atlas is using the latest genetic sequencing tools to characterise every type of cell in the human body. It is led by scientists at the Sanger Institute and the European Bioinformatics Institute, which is also on the campus and is part of the European Molecular Biology Laboratory.

This included setting out our view of what science needs after Britain leaves the European Union (EU) in 2019. We have already seen, for example, a significant drop in applications from people in EU countries to do PhDs at the Wellcome Trust Sanger Institute, emphasising the need for a straightforward migration system that welcomes students, researchers, technicians, innovators and their families to the UK. Two other areas we want the government to prioritise are strong investment in British research, and a commitment to securing associate membership of EU science schemes that promote international collaboration. successful activity is fully supported. Two years ago, our strategic framework set a new scale of ambition for how Wellcome should work taking into account the sustained growth of our investment portfolio, the expertise we support and the influence we have in the world. We have committed to maintaining or increasing our existing levels of support for great ideas in research, innovation and public engagement, while also looking for opportunities to transform specific areas we have prioritised.
After setting out our position to political parties standing in the UK’s General Election in June, we have engaged with representatives from both the UK and the EU as Brexit negotiations continue. Wellcome’s voice as an advocate for science has been heard in public as well as private: in September 2017 we coordinated the launch of Together Science Can, a campaign to celebrate and build support for international collaboration in research.

Globally, we worked closely with the G7 nations and also the G20, chaired by Germany this year, to secure commitments from their leaders to act on urgent health problems including epidemics, drugresistant infections and climate change.

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Review of Charitable Activities (continued)

Wellcome Centres give groups of

Membership of the Executive Leadership

Team (“ELT”, formerly the Executive Board) was extended to include four additional roles, while four more colleagues were recruited to sit on ELT subcommittees. As well as bringing new skills to the leadership team, this increased the range of perspectives at the top of the organisation.

Advances in surgery

researchers funding for the shared facilities, collaboration and training they need to deliver world-leading, highimpact research. Following an open competition last year across our funding portfolio, eight renewed Wellcome Centres were joined by seven new ones, which opened or prepared to open this year. Although the outcome has been very positive, we have reﬂected on a process that, while allowing us to weigh all the proposals against each other, took a lot of time and effort from many people. In future, we do not intend to consider this many applications for Centre status concurrently.

One of three new Centres in our Innovations portfolio, the Wellcome EPSRC Centre for Interventional and Surgical Sciences has been established at UCL to develop more precise, less invasive surgical procedures. As well as safer treatments and shorter recovery times in hospital, this should mean that more people can be offered the beneﬁts of complicated but life-altering surgery.